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What Characteristics Make A Company Truly Ethical?


Businesses are driven by profit. This means the pressure to increase earnings is high, causing some to disregard how their decisions affect the environment.

However, not all businesses disregard their effects on the environment. Some businesses have strong ethical values that guide them to participate only in projects that benefit humankind.

Whether it’s an investor or a company desiring to be ethical, understanding the characteristics that make a company ethical is crucial.

Ethical companies have a business advantage as they easily attract investors, increasing their growth prospects.

If you are wondering how a company can be ethical, here are characteristics that make a company ethical.

Impact To Humanity

To determine how a company can be ethical, you should check its human value. A humankind value analysis displays a company’s value to society compared to its negative business impacts, such as greenhouse gas emissions. Where the positives outweigh the negatives, a company is considered ethical.

Company’s Stakeholder Balances

A business will have one of two goals, delivering maximum shareholder value or balancing the needs of stakeholders. The latter represents how a company can be ethical.

Stakeholders, in this case, include the local community, employees, and customers.

Correct Treatment For Humanity

A company’s organizational culture can be good or bad depending on the factors unique to its processes.

Management’s humility, equal treatment, and employee unity define an ethical company. On the other hand, an unhealthy company will have misaligned goals, unequal treatment of employees, and superiority.

An ethical company, through its human resource, should review its processes to ensure the integrity and correct treatment of humanity.

Objective Rather Than Profit Driven

Making money for investors is a top mandate for traditional companies. This mandate challenges how a company can be ethical since it can destroy the economic value for others in their pursuit of profit.

Despite this challenge, a traditional corporation can still select options that benefit its stakeholders and investors to uphold ethics. The guiding principle should be what goes around comes around.

A company that treats its stakeholders well is most likely to succeed.

An ethical business should be driven by an objective more concrete than profits. As the management champions such values, backed by their employees, the company becomes united in the ethical pursuit that can help it navigate tough times.

Frequently Reviews Their Ethical Framework

Since the needs of society change frequently, an ethical company will consider reviewing its ethical framework periodically to ensure that the current needs of society are met.

Professionals advocate for companies to review their ethical standards after every three years. This includes a  review of any ethical breaches the company was involved in to establish the cause and how to avoid such in the future.

How A Company Can Be Ethical

Modern trends in business display a growth in ethical companies, and understanding their traits are necessary before making an investment decision.

Spotting an ethical company entails looking at its ethical traits with respect to its impact on the community, environment, and employees. A company with the above traits is truly ethical and worth your investment.

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